EUR rides high after German GDP - BBH
The euro was already trading firmly before German GDP surprised to the upside and helped lift the single currency through $1.17 for the first time since the ECB meeting in late October, explains the research team at BBH.
“The 0.8% quarterly expansion lifted the workday adjusted the year-over-year rate to 2.8% from a revised 2.3% in Q2, which is the fastest in six years. Italian Q3 GDP growth was also firm at 0.5%, matching its best pace in seven years. The 1.8% year-over-year pace is also the best since 2011.”
“Against the dollar, the euro is extending the recovery that began last week from about $1.1555 (the lowest level in four months) and is above the 20-day moving average (~$1.1685). We see risk toward $1.1745-$1.1760. We view these euro upticks as corrective in nature and note that the US two-year premium over Germany continues to widen. It stands near 2.43% now, up 40 bp in the past two months.”
“The euro was also boosted by cross rate demand after the softer than expected UK and Swedish inflation.”